Hitting out at the last UPA government for the labyrinth the economy has got into, finance minister Arun Jaitley on Tuesday hinted that many of the regime’s policies that stymied economic growth could be reversed. “The UPA left the economy in a bad shape. Things that have been done have to be undone,” he said in the Rajya Sabha in what was seen as an oblique reference to the UPA’s costly welfare schemes that strain government finances and investor-unfriendly policies like retroactive taxation.

He rued many opportunities missed by India to become a low-cost manufacturing hub for the world and said it can’t afford to miss another chance, which could be the last.

“For the last two year India has grown at less than 5%, which is disappointing,” the minister said, adding rhetorically that even if the country did not have a government, the economy would still have grown at 5%.

Earlier in the day, bankers and officials from financial institutions, hit by the double whammy of tepid consumption spending in the economy partly caused by the prevalence of high interest rates transmitted from the central bank’s tight monetary policy on the one hand and paucity of capital on the other, impressed upon the minister the need to take bold steps to bolster their lending prowess and improve the government’s own finances.

Jaitley said in the Rajya Sabha that the government’s focus will be to strengthen social and physical infrastructure, unlocking the potential of the railways, reviving the manufacturing sector and creating more jobs. Jaitley said the slowdown in economic growth coupled with high inflationary pressure poses a challenge to the economic environment. He told banks and FIs that “we together need to steer the economy in the right direction”.

Bankers told Jaitley to consider the listing of Life Insurance Corporation to pare the government’s stake in he insurer to 51% from 100% now, a move that could fetch substantial funds for bank capitalisation and for bridging the fiscal deficit. LIC’s asset value is estimated to be R15.6 lakh crore.

The bank chiefs stressed that the government’s stake in public sector banks (including in State Bank of India and Punjab National Bank, where it now holds 58%) could be reduced to 51% to boost their capital base.

Hiving off the banks' non-core businesses and assets (including real estate) has also been mooted as an option to raise capital. The capital requirement of all banks (including private banks)